Facebook's new search engine likely to increase advertising but will users like it?

Related Links

In the wake of Facebook Inc.'s announcement about its new search feature, industry specialists are divided on whether Graph Search will boost advertising revenue and profit for the social media giant.

The limited beta release of Graph Search is designed to allow Facebook users to ask a question and get an answer based on content already on the site. For example, a person can ask Facebook “What are some restaurants my friends have visited in San Francisco?” and the site will generate a list based on those parameters. On the off chance that none of the friends have dined in San Francisco, Facebook will connect the user with Bing, Microsoft’s search engine.

Sounds useful but already some industry players and analysts say they are unimpressed and underwhelmed by the launch.

“It remains unclear on how advertisers will be able to use this Graph Search product to better market and sell their products to Facebook users. Search can be great for ad targeting because it allows marketers to direct ads about their products and services to the right people at the right time,” Kim said. “Unfortunately, the new Facebook Graph Search capabilities are limited to people, places, photos, and other types of searches that are weak in revealing commercial intent.”

Nate Elliott, vice president and principal analyst of Forrester Research Inc., called the new feature “important.” But he added, “It’s also pretty boring.”

“The big news isn’t that Facebook has fixed its search tool; the big news I that it didn’t do this long ago,” Elliott wrote on Forbes Magazine’s tech blog. “In fact, Facebook should be more embarrassed that its current search engine was so bad for so long than proud that its next search engine looks pretty good.”

Some marketing experts, though, believe the new search feature will boost advertising revenue for Facebook.

Marc Purtell, director of SEO at MediaWhiz, said Graph Search will produce more ad revenue by targeting users with “more intent to buy,” which will result in more click-through rates.

“Facebook now has the ability to allow advertisers to show ads to users searching for products or services by bidding on various keywords related to those products or services,” Purtell said.

Graph Search came as a response to Facebook users who expected a more robust search engine on the site, according to the company.

“People put so much into Facebook,” a Facebook spokesperson said, “but until now there have been very limited ways to access this information.”

Tom Collinger, the executive director of Northwestern’s Medill IMC Spiegel Digital & Database Research Initiative, agreed that Graph Search is a smart move for Facebook but said its success hinges on whether Facebook users are happy with the ads generated by their searches or feel bombarded by them.

“Ideas that are good for advertisers in a media environment are only good for advertisers if they are relevant to consumers. Said another way, advertising that suddenly shows up riding along with, inside or leveraging the data that comes as the result of a graph search that is not seen by the consumer as in any way relevant, let alone, valued I think is a terrible idea.”

During the press event Tuesday, Facebook’s CEO and co-founder Mark Zuckerberg said the company is “focused on user experience” and that “Facebook has had sponsored search results for awhile.”

In a "liveblog" during the press conference, a blogger named Ilya commented: “Meh for the general public. But that sound you hear is every advertiser’s jaw hitting the floor…. Advertisers and promoters are gonna have a field day with this. Huge.”

Facebook’s shares closed Thursday at $30.14, up 29 cents. The company went public in May with its shares priced at $38. But the stock opened at $42.05 but then sharply dropped. Facebook shares have since traded as low as $17. 55.